Strategic bonds

Fixed income experts share views on recent market moves at Investment Week's Strategic Bond Focus.

Thanks to investors hungry for better returns, high yield bonds have performed strongly over the last year. More and more companies are issuing corporate bonds in that space. But how long can the good times last?

Henderson Strategic Bond fund manager John Pattullo has moved aggressively in to gilts in a bid to hedge against a worldwide deflationary shock caused by the chaos in emerging markets.

Last year was brutal for many fixed income investors as talk of tapering in the US and the great rotation to equities pushed up core bond yields. But which portfolios protected investors regardless - and could do so again this year?

STRAT BONDS

It would be an understatement to say it has been an interesting and, in many ways, frustrating recent period for bond managers.

Global bond funds suffered the worst outflows of all asset classes in June and bond indices fell sharply after comments from the Federal Reserve signalling the end of quantitative easing.

Japan could be the next economy to default as its debt levels are unsustainable, according to Roger Webb, investment director on the credit team at Scottish Widows Investment Partnership (SWIP).

GILT SELL-OFF

Adam Smears, head of investment research at Skandia, has left the group to pursue other opportunities.